Case Study
American mattress
At a glance
American Mattress was loaded with debt. Ownership tried to grow out of trouble. However their solutions did not address underlying business problem. Instead, they added to cost structure.
The company was burning approximately $350k of cash per month (two months of cash remaining).
Trunnion effectively managed communication and negotiations with stakeholders. As a result, American Mattress staved off Ch. 11 and stabilized the top line.
the facts
American Mattress is a specialty retailer with $50M in sales and $5M in debt. The retailer saw double-digit YoY decline in sales from their 100 locations between 2 states. Competition, lack of advertising, mistrust and poor communication necessitated a dramatic turnaround.
solutions
As Interim Management, strategic alternatives were evaluated including capital infusion, sale of the business, and filing for Ch. 11. The primary objective was to address the bloated cost structure.
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Reduced store footprint to approx. 70 locations through buyouts and "going dark."
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Negotiate rent concessions and
lease buyouts with landlords. -
Significantly reduced management
compensation.
results
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Extended the life of the company
Significant negotiated concessions and dramatic internal cash savings initiatives allowed American Mattress to dual track solutions.
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Staved off Ch. 11
Additional capital was raised and provided management the runway to stabilize the top line.
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Achieved Goal
Sale of the lender’s secured, unsecured and equity/member interest positions for a 50% premium over the expected recovery in a Ch. 11 or liquidation.